Europe's fragmented defence industry needs coordination to avoid supply crisis - Draghi report

Europe's defence industry faces structural weaknesses in innovation, governance, international dependency and public spending, former Italian prime minister Mario Draghi said in his report on EU competitiveness.   

"Member states do not systematically exploit the benefits of coordination at EU level, standardisation and interoperability, joint procurement, acquisition and maintenance, or pooling and sharing of resources," reads according to the report, published on Monday (9 September).   

The result? Uncoordinated, inadequate and inefficient defence spending compared to other global players such as the US, which spends almost three times as much as the bloc.   

Over the past decade, member states have reversed the trend of underinvestment in the defence industry that followed the Second World War - with most EU countries committing to spend at least 2% of their GDP on military spending. 

But despite national budget increases, defence spending is still 'insufficient' given the existing geopolitical environment, Draghi noted, claiming Europe is trying to build up its defence capabilities and provide military support to Ukraine with an internal (mainly export-oriented) industry that is not prepared for such an increase in demand.   

The EU Commission estimates that Europe's defence industry needs an additional €500 billion over the next decade to remain competitive and meet current demand, and Draghi warned of the potential negative consequences of not working together in the coming years.       

"Increased internal demand without reinforcing coordination may aggravate supply bottlenecks in the European defence market," Draghi's report said.  

Europe's defence industry is currently highly fragmented. The market is dominated by